By Adriel N. Clayton and Esther S.J. Oh

In Fung Loy Kok Institute of Taoism v Municipal Property Assessment Corporation, released on May 24, 2024, the Court of Appeal for Ontario considered whether various “satellite site” properties owned by the Fung Loy Kok Institute of Taoism (“FLK”) across Ontario qualified for a property tax exemption as “places of worship” under paragraph 3(1)3 of the Ontario Assessment Act. Under the Assessment Act, land owned by a “religious organization” that is “a place of worship and the land used in connection with it” is exempt from property tax. However, the Act does not define what is meant by “worship” or “place of worship”. An application for leave to appeal the case to the Supreme Court of Canada was brought, but was subsequently dismissed on January 16, 2025, bringing closure to the case.

The case centered on whether FLK’s tai chi classes held at its various “satellite sites” rendered each of these properties “a place of worship” for the purposes of the Assessment Act.   FLK is a Taoist religious organization that owns several properties across Ontario, including a main temple (which is already recognized as a “place of worship” and therefore exempt from property taxes), an international center that serves as FLK’s headquarters and retreat center, and nineteen satellite sites across Ontario, where FLK members practice tai chi and carry out related activities.

FLK had sought property tax exemptions for the international center and satellite sites, arguing that these locations were also “places of worship” on the basis that Taoist tai chi is a form of worship integral to Taoist beliefs. The Municipal Property Assessment Corporation (MPAC) challenged this claim, asserting that tai chi at these locations resembled secular exercise classes rather than worship.

When the matter was initially brought to court in January 2022, the Ontario Divisional Court held that the satellite sites did not qualify as places of worship, because the tai chi sessions lacked key indicators of worship, such as prayer, chanting, or ritualistic elements, participants were not required to hold Taoist beliefs to participate, volunteers who taught the classes were not religious leaders or teachers and were not required to be Taoists or have any level of Taoist knowledge.  There was also a perception by the general public that the classes as fitness-oriented rather than religious in nature. In summary, the application judge concluded that the evidence supported MPAC’s position that the persons engaged in the Tai Chi classes at these locations were not worshiping through Tai Chi.

On appeal, the Court of Appeal again considered the interpretation of “place of worship” under the Assessment Act, noting that there is no definition of "place of worship" in the Act. The court therefore had to assess whether FLK’s use of its properties fit within the ordinary and legal meaning of the term.

FLK argued that Taoist Tai Chi is a form of worship for its members, akin to prayer or meditation, and that the sincere religious beliefs of its members should be the determining factor in whether an activity constitutes worship. As well, it asserted that courts should defer to a religious organization’s characterization of its own practices.

Of note, the Municipal Property Assessment Corporation (“MPAC”) accepted that “[i]t is a sincere belief of the FLK religion that the practice of FLK Taoist Tai Chi at all of its consecrated properties is worship done in places of worship”, and MPAC accepted that the satellite sites are “consecrated properties”.  In addition, MPAC acknowledged that some of the activities FLK conducts at the satellite sites (notably, Taoist chanting) were religious in nature. Also of note, FLK did not dispute that tai chi can also be performed in a secular manner that does not constitute “worship”. The evidence before the court showed that the satellite sites were predominantly used to hold classes, including tai chi classes.

While the court acknowledged that FLK members sincerely believe that Taoist tai chi is a form of worship, it emphasized that the perception of participants and the broader public is relevant in determining whether the primary function of a site is worship. To this point, it noted that tai chi, including FLK’s version of tai chi, is widely practiced in secular settings. The lack of formal religious instruction, prayers, or rituals in FLK’s classes weakened the claim that they were inherently acts of worship. As well, based on evidence before it, the court found that the satellite sites operated primarily as tai chi studios rather than dedicated places of worship. On this basis, the court found that the class format, open participation, and lack of religious obligations supported MPAC’s position that the satellite sites were not primarily used as places of worship.

FLK also sought property tax exemptions for a contemplative garden and a sales area at its international center. However, the court found that the garden was primarily used for private reflection rather than communal worship. As well, the court took the position that FLK failed to provide sufficient evidence that a sales area in tie international centre was used in direct connection with worship.

In light of the above findings, the Court of Appeal dismissed FLK’s appeal (with leave of appeal to the SCC being denied), affirming the lower court’s decision that the satellite sites and the contemplative garden and sales area of the international center were not tax-exempt places of worship pursuant to the Assessment Act.

This case serves as a reminder that a successful application for a property tax exemption under the Assessment Act requires clear evidence that the property owned by a “religious organization” is “a place of worship and the land used in connection with it.” Municipal property tax exemptions are narrowly construed, particularly when an organization’s programs integrate both religious and secular elements.

​Read the February 2025 Charity & NFP Law Update